China flash PMI goes down, takes Australian dollar with it

China’s manufacturing output is at its lowest level in seven
months, according to the HBSC flash PMI for February.

The result of 48.3 was down from January’s overall
result of 49.5, The Australian reports, and was well below a prediction of
around 49.5 by a group of Bloomberg economists.

Any result under 50 indicates contraction. The flash PMI
covers the responses of around 85 to 90 per cent of the companies surveyed in
the overall HSBC PMI, which is released a week after the flash PMI.

The Australian dollar fell half a cent against the US dollar to around 89.5 cents immediately following the result. It has since recovered
to be 89.88 cents at 6:30 am this morning.

Reuters and others note that some economists urge caution
when interpreting the Chinese PMI results for February, due to the impact of Chinese
Lunar New Year celebrations on factory output.

However, HSBC’s Hongbin Qu has said the results might
reflect “underlying momentum for
manufacturing growth could be weakening.”